Credit Counseling is a free service that includes analyzing an individual or family’s, liabilities, assets, monthly expenses and monthly income, in order to provide guidance and ultimately recommend an action plan to pay off their unsecured debt.
One of the debt-payoff strategies we recommend is a debt management program (DMP). Our program typically allows the participant to enjoy reduced interest rates, one low monthly payment, and becoming debt free in fewer than five years.
No charge. Credit counseling is a free service provided by non-profit organizations like DebtWave Credit Counseling.
If you enroll onto a Debt Management Program, there is a one time enrollment fee and a monthly service fee.
When you speak with one of our certified credit counselors, it’s helpful to have a rough estimate of your monthly income and expenses. We will pull your credit report in order to view all of your liabilities so no need to worry about having statements or other financial documents.
A Credit Counselor provides guidance and practical solutions to consumers that are struggling with credit card debt. They conduct a financial analysis by reviewing a consumer's liabilities (debt), monthly income, monthly expenses and assets. Based on the financial analysis, a credit counselor will provided the consumer a recommended action plan. This plan may include enrolling onto a Debt Management Program, reducing certain expenses and/or increasing income.
Credit Counselors should be certified by a third party organization. They offer free advice.
The main purpose of credit counseling is to provide financial education and guidance to consumers that are struggling with credit card debt. Examples of financial education are helping clients understand how interest rates work and providing budgeting tips. The goal of credit counseling to provide consumers an action plan on how to back their credit card debt in a timely manner without damaging their credit score if possible.
Pros:
Improve financial education
Reduce stress from credit card debt
Get a plan to pay off debt
Cons:
You will no longer use credit cards that you enroll onto the plan
You credit score may slightly decline from closing the cards
Clients that enroll onto a debt management plan pay a small monthly fee to the credit counseling agency. This fee is included into the client's total monthly payment and deducted when payments are made to their creditors. The fee amount varies per state and is most commonly a % of the total payment made to their credit card companies. It can also be based on the number of accounts enrolled.
Credit Counselors are typically paid hourly.
About 65% of the clients that enroll onto a debt management program successfully payoff their debt. The most common reason why some people don't succeed is due to a financial hardship such as job loss or increased expenses.
Yes. In most cases, interest rates are reduced significantly on a debt management program. The average interest rates on credit cards on a debt management program is roughly 7%.
In most cases, no. But you may see a drop in your credit score when you accounts get closed after enrolling. Clients that remain current with their payments on the program and accounts off the program will likely see their score go up as their balances go down.